The drums of war are pounding. Prominent American companies, through a variety of business associations, are urging the Obama Administration and Congress to punish the Government of India for mounting hostile actions in a brewing trade war. For its part, the Indian government cannot be pleased with the dramatically increased filing fees and restrictions to be imposed on its technology and consulting companies (which garners about $100 billion annually from U.S. trade for its domestic economy) if S. 744, the Senate's comprehensive immigration reform (CRI) proposal, or some comparable variant, is enacted into law. No wonder that U.S. Secretary of State John Kerry is in New Delhi for government-to-government discussions seeking to head off a trade and immigration war that spells trouble for countless innocent parties. Prime among the collateral-damage sufferers are American consumers who benefit from lower prices (especially in light of the falling rupee) and greater technological efficiencies spawned by the global trade-in-services and trade-in-goods business models. Why is this war on the verge of a surge? India is the world's largest democracy, an English-speaking nation not known for cyber-stealing American government and business secrets, unlike the China. To be sure, Indian courts and government agencies must stop its protectionist ways, as the U.S. business associations' letter insists:

Over the last year, the courts and policymakers in India have engaged in a persistent pattern of discrimination designed to benefit India's business community at the expense of American jobs. The [Government of India] recently demanded that as much as 100 percent of its market for certain information technology and clean energy equipment must be satisfied by firms based domestically. Administrative and court rulings have repeatedly ignored internationally recognized rights – imposing arbitrary marketing restrictions on medical devices and denying, breaking, or revoking patents for nearly a dozen lifesaving medications. These actions and others constitute a disturbing trend that may continue and even expand to other products, sectors, and countries. Already there are indications that other countries are considering similar measures. Such actions are completely at odds with recognized global norms and raise troubling questions about India's compliance with its international obligations to protect ideas, brands, and inventions and to treat imported goods no less favorably domestic products. These actions are unacceptable for a responsible middle-income country and rising global power to treat its second-largest export trading partner. They are counterproductive to India’s stated goals to attract capital and to develop its own innovative economy. Forcing local production and seeking to profit and create jobs through the rejection of basic property rights undermines India's ability to achieve the type of long-term foreign investment that is so essential for sustainable economic growth and job creation.

American government officials aren't pacifist observers either, but rather aggressive combatants. They've dropped bombs on India by financing U.S. border fortification with markedly higher filing fees that have fallen disproportionately on Indian companies. They've lobbed grenades by applying discriminatory and extra-legal interpretations to refuse Indian work-visa applicants, as shown here, here and here. Immigration and trade protectionism hurts American and foreign citizens far more than it helps. And now S. 744 would attempt to legislate out of existence India's global business models notwithstanding that it takes two to tango, contractually, that is, an Indian sourcing firm and its American corporate customer. My solution: The U.S. should enact legislation granting Indian citizens eligibility for E-2 treaty investor visa classification on a reciprocal basis, just as it did a year ago with Israel. And just like the Israeli E-2 (which remains stalled), treaty investor reciprocity should only occur when American citizens doing business in India or Israel are given equivalent work-visa privileges in each respective country. The Indian E-2 could well be the olive branch that the warring Indian and American sides need to declare a truce and sue for peace. War is hell. Give peace a chance.

I worry a lot about the future facing America's young adults. Saddled with Dickensian levels of college and grad-school debt, largely unable to find opportunities in their preferred careers, our young fear that they'll be relegated to work in low-paid, dead-end jobs. They and their parents are rightly concerned that the middle class is disappearing, the gulf between the ultra-rich and the poor is growing, and citizens coming of age today may never achieve the American Dream of economic progress. The country's political, labor and business leaders seem to think the solution lies in restoring our nation's former prominence in manufacturing:

At the Second Annual Conference on the Renaissance of American Manufacturing held in Washington on March 27, speakers from the Obama administration, the Mitt Romney and Rick Santorum presidential campaigns, Republican and Democratic senators, CEOs, and representatives from labor, think tanks and trade associations all agreed: the renewal of American manufacturing should be a top economic priority.

I'm not persuaded. Don't get me wrong, this native Detroiter was glad when the Obama Administration stepped in to save the U.S. auto industry. Despite the protests of a certain "Son of Detroit," the de facto GOP nominee for president, who would have "Let Detroit Go Bankrupt," and now derides the auto bailout as "crony capitalism," maintaining a base level of domestic manufacturing is an important element of our national security.

[If] you look at America’s metropolitan areas, it’s clear that manufacturing-oriented places are relatively poor. The wealthy clusters in the United States are built around things like software, biotechnology and medical devices, higher education, finance, and business services. Places like California, Minneapolis, Seattle, and the Northeast corridor are far richer than the factory-oriented Rust Belt and Southeast.

Rather than overemphasize the rebuilding of its industrial base, America should play to its true strengths. We are the "crazy ones" who "think different", the dreamers (and DREAMers), the visionaries and innovative problem-solvers. Although we've fallen behind in the STEM fields, and must therefore refocus our emphasis on math and the sciences, we are blessed as a nation with an abundance of creative savants who color outside the lines. Our technology dazzles and transforms the world as Hollywood entertains it.

These strengths illustrate the fundamental economic principle of comparative advantage -- do only what you do best and let others do their own best thing. It works domestically, for example, when companies make the "buy or build" decision and choose to focus on core competencies. It would work as well in the global economy if trade were truly free and fair, protectionism were eliminated, and guarantees of minimum labor standards and trade dislocation payments were universally achieved.

If America played to its strengths, our leaders would promote basic research and development, and generally decline to let government pick winners and losers. They would recognize that service industries today account for almost three-fourths of all American jobs, and that the upside potential for better-paying jobs lies more in services than in manufacturing.

In the United States, services increasingly dominate the economy. Employment in this sector has risen steadily since the 1960s, with 70 percent of Americans now working in service industries. And America already exports more services than any other country in the world, even more than the next two competitors combined. In 2011, that amounted to $612 billion exported in services, up 10.1 percent from 2009, and up 136 percent since 1991.

Still, there is great untapped potential for more, since all of these exports are being sold from a tiny share of all the American companies that could participate in the global marketplace.

Steel protectionism is another culprit. Our would-be trading partners have seen America (the leading proponent of free trade) as behaving hypocritically when President George W. Bush imposed tariffs on imported steel in 2002 and again when Congress enacted and President Obama signed the American Recovery and Relief Act in 2009 (with its "Buy American" requirements to purchase iron, steel, and manufactured goods for use in public construction and public works projects).

Global trade in steel and farm products are important to be sure. Lowering these trade barriers globally or regionally (while providing trade adjustment assistance and retraining for displaced workers) would be beneficial. It would allow American consumers to purchase more goods at lower cost. The real promise of American prosperity lies, however, not so much in eliminating barriers to trading tangible commodities, but rather in exploiting our lead in the international trade for services.

The Times'Catherine Rampell in sleuthing out the cause for global restraints on trade in services concludes her article by identifying the prime culprit:

Perhaps the most basic constraint is not abroad but here in the United States, which has relatively tight immigration controls. Services often require workers to travel freely across borders. Asking India to allow American consultants to enter and leave Delhi at will is difficult if the United States cannot — or, more accurately, will not — reciprocate. Economists acknowledge concerns about freer trade displacing some American workers. But they say the United States would nonetheless have a net gain in jobs if borders everywhere were more open.

“We need to have a visa policy that allows businesses to operate efficiently at home and abroad, and that allows all professionals to be able to move back and forth between corporate offices,” said Jeffrey J. Schott, a former trade negotiator and now senior fellow at the Peterson Institute. “If we don’t, why would anyone else?”

If demography is destiny, the U.S. economy may be in the midst of a decades-long slowdown. The U.S. labor force is growing at about half the rate it was 20 years ago; according to recent projections by the Bureau of Labor Statistics, it will continue to expand at a slightly lower pace through 2020. . . .

“In the end, what an economy is depends upon how many bodies you have,” said Anthony Carnevale, an economist and director of the Georgetown University Center on Education and the Workforce.

Carnevale added that if the diagnosis for what ails the economy is the size and quality of the workforce, that may be good news, at least compared to theory that the biggest problem is foreign competition. “To the extent this is a domestic demographic problem, it’s more in our control,” he said. “We can’t blame the Chinese for the quality and quantity of our domestic labor force.”

Indeed, America's domestic demographic problem is in our control. The remedy will not be found, however, by rebuilding our manufacturing base to its former glory, or, as some have recently done, by warring with women on family planning decisions.

The U.S. will only correct its trade imbalances, redouble the nation's sizable lead in the global trade for services, and create high-paying U.S. jobs for present and future generations, by modernizing our creaky, crotchety immigration laws.